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hand-holding-circle-dollarBorrowing with Shift Stocks

Borrowing in DeFi allows you to access additional liquidity while still keeping full exposure to your Shift by using them as collateral to borrow stablecoins or other supported cryptocurrencies.

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How Borrowing Works?

When you deposit your Shift Stocks as collateral (for example TSLAs), you unlock the ability to borrow against them. It works similarly to how a bank issues loans, except here, the entire process is governed by a transparent smart contract.

When you borrow in DeFi, the value of your collateral moves up and down with the market. Because of this, your safety buffer can change over time. That’s why you must to keep an eye on your collateral-to-debt ratio.

When you borrow in DeFi, your collateral value doesn’t stay fixed, it moves up and down as the asset price fluctuates in the market. These price changes affect the margin, and liquidation, of your borrowing position. That's why you should always keep an eye on your collateral-to-debt ratio

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If your collateral falls too much in value, the smart contract will automatically liquidate part of your position to protect the protocol and maintain solvency.

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Borrowing via the Shift DeFAI SuperApp

Borrowing allows you to instantly receive liquidity without selling your Shift Stocks, offering you the flexibility to participate in new opportunities across DeFi.

Using multiple lending protocols can be complex. The Shift DeFAI SuperApp consolidates borrowing options into a simple one-click interface.

Here are some common uses of borrowed assets:

  • Get extra liquidity while still holding their stocks

  • Earn more yield by using borrowed funds in LP or lending vaults

  • Increase exposure by buying more of the stock (looping)

  • Short the stock if they believe its price will fall vs. stablecoins or other assets

  • Managing your short-term liquidity needs

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You choose how to use the borrowed liquidity, and repay at any time to release your collateral.

Here's how it works:

  • Collateral deposited: $1,000 worth of TSLAs

  • Maximum borrow amount (40% LTV): $400 USDC

  • Borrow APR: 6%

  • Repayment: You can repay at any time to unlock your collateral

You still keep full exposure to your $1,000 in TSLAs, while using the $400 USDC for other opportunities across DeFi.

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Borrowing tools are currently under development. For updates, join our Telegram or follow us on X: www.x.com/shiftrwaarrow-up-right

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Understanding the Risks

Borrowing introduces several risks you should understand:

  • Liquidation: If your collateral value drops too much, part of your position may be automatically liquidated.

  • Interest Costs: Borrow rates change over time, so your cost to borrow may increase.

  • Market Volatility: Fast price movements can affect your collateral-to-debt ratio quickly.

  • Smart Contract Risk: Borrowing relies on audited smart contracts, which are secure but not risk-free.

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Here's a simple example of Liquidation process

  • Collateral: $1,000 TSLAs

  • Borrowed: $400 USDC

  • LTV threshold: 40%

  • Liquidation threshold: 50%

If the price of TSLA drops by 25%:

  • Your collateral is now worth $750

  • Your borrowed amount stays the same: $400

  • Your new LTV = 400 / 750 = 53%

Because 53% is above the 50% liquidation threshold, the smart contract may automatically liquidate part of your collateral to bring your position back to safety.

This protects the protocol and ensures lenders stay whole.

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Lending consider a lower-risk activity compared to DEX pools LP as it does not require managing price ranges, rebalancing positions, or facing impermanent loss.

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